Utah, a Model of a Health Exchange That Works

By David Clark

Years of experience has taught us that, when it comes to Congress, “We the people” should keep our expectations low. With the passage of federal health care reform, it seems those expectations have been soundly met. The Patient Protection and Affordable Care Act (PPACA) is, at best, seriously flawed legislation. That said, it has certainly brought health care to the forefront and now serves as an unprecedented opportunity to legitimately reform a fragmented and failing system.

One of the most sweeping elements of the law was the requirement that all states establish a statewide health insurance exchange by 2014. It further stipulates that if, by 2013, the U.S. Secretary of Health and Human Services (HHS) determines a state hasn’t made “sufficient progress” toward establishing an exchange, the feds will come in, take over, and default the state into the one-size-fits-all federal program.

State health insurance exchanges, as originally conceived, were supposed to serve as “farmers markets”–a centralized location where insurance carriers could come and display their wares and where consumers could make comparisons on based price and quality and then purchase the plan that best suited their individual or family circumstances. The authors of PPACA, however, bastardized the concept by making exchanges less competitive and more regulatory.

Currently, only two states have functioning exchanges–Massachusetts and Utah. The two models share a number of similarities, but also some distinct differences. In Utah, we began our path to reform with the notion that the invisible hand of the market, not the heavy hand of government was the best means whereby problems with the health care system could be addressed.

We began by establishing the defined contribution market and creating the Utah Health Exchange. Employers who participate in the defined contribution market give workers a specified dollar amount rather than a specified (or “defined”) benefit plan. Workers then use those dollars to shop in the exchange for a plan that best fits their needs.

This approach has the potential to unleash competitive forces by offering expanded choice while preserving pre-tax advantages for both the employer and employee. Furthermore, it introduces consumerism into the system by re-sensitizing patients to costs and giving them control over their personal medical expenditures. It should be noted that the Utah Health Exchange was not a regulatory entity, was not a new state agency, and did not require any mandates.

States, by design, serve as laboratories for innovative government solutions. There is no “one-size-fits-all” solution to the question of how best to reform the health care system; truth be told, there should be at least as many solutions as there are individual states.

The upcoming elections introduce a level of uncertainty with respect to health care reform. The strategy to “repeal and replace” does not seem viable. Although it seems inevitable that Republicans will make significant gains in Congress this November, no one is forecasting a veto-proof majority. States must have a second battle plan in mind – one more likely to succeed as this drama plays out. The new federal health care reform legislation includes a great deal of regulatory discretion and, since power abhors a vacuum, that void will necessarily be filled with either the collective states or with the federal government.

Unfortunately, states have historically underplayed their hand in Washington, their inaction resulting in them being acted upon. With respect to health care reform regulation, states should assert themselves and beat Washington to the punch. As the regulatory infrastructure for health care reform begins to take shape, states must be able to present tangible evidence of their willingness and ability to handle this responsibility. They must also be able to demonstrate that they can do so more effectively and efficiently than Washington.

Make no mistake about it, for anyone involved with the health care industry–including patients, doctors, hospitals, regulators, insurance carriers, and brokers–the world changed on March 23, 2010. From this point on, the effort to protect patient choice and preserve private health coverage will be a series of battles fought in the trenches of regulation. PPACA, if amended and corrected, has the potential to effectively elevate the efforts of states who dare to creatively advance in this most important effort–but only if we aggressively seize the opportunity.

Clark, a Republican, is Speaker of the House of the state of Utah.

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ObamaCare will clog America’s medical system

By Marc Siegel
A month ago, U.S. Health and Human Services Secretary Kathleen Sebelius sent a letter to the president of America’s Health Insurance Plans stating that the impact on insurance premiums from “the new consumer protections and increased quality provisions” of the new health reform law “will be minimal … no more than 1% to 2%.” Sebelius warned Karen Ignagni that there would be “zero tolerance” for insurers blaming unjustified premium increases on the new law. Talk about subtle.

Sebelius’ threat, though, obscures a larger problem: The new health care law mandates and extends the kind of insurance that breeds overuse, thereby driving up costs and premiums. And here I thought the reform intended to reduce costs.

As the details of this massive government-led health care overhaul begin to trickle out, let me be clear (to borrow the president’s go-to phrase): The medical system is about to be overwhelmed because there are no disincentives for overuse.

A free-for-all

ObamaCare was lauded by many for covering all Americans with pre-existing conditions. That’s not the issue. We’re going to get into trouble because of the kinds of coverage that the new law mandates. There are no brakes on the system. Co-pays and deductibles will be kept low, and preventive services will have no co-pays at all. That sounds like a good deal for patients, yes? But without at least a pause to consider necessity and/or cost, expect waiting times to increase, ERs to be clogged and longer lead times needed to make an appointment.

Patients with new Medicaid cards who can’t find a doctor will go where? To emergency rooms. The escalating costs of these visits (necessary and unnecessary) will be transferred directly to the American public, both in the form of taxes as well as escalating insurance premiums.

Beginning in 2014, insurance exchanges will be set up in every state so that individuals can choose a health insurance plan. This will help control costs, right? Wrong. Don’t expect to find individually tailored plans or those with higher deductibles or co-pays. They won’t be there because they can’t receive the government stamp of approval.

In the new system, my patients will be able to see me as often as they’d like. But will they get the same level of care? I don’t think so. I anticipate that more expensive chemotherapies and cardiac stents or transplants, for instance, will have a tougher time being approved, as is already the case in Canada.

Over on the public side, the new Independent Payment Advisory Board — established by the health reform law to “recommend proposals to limit Medicare spending growth” — will advise Medicare that some treatments are more essential and more cost-effective than others. I believe that value judgments inevitably will have to be made, reducing my options as a practicing physician. Private insurers will follow suit, as they often do.

During the battle over this reform, you often heard, even from President Obama, that you’d be able to keep the plan you have. What he didn’t say — but what we now know — is that because of this new law, the private markets will have to remake their plans, that the costs will rise and that the plan you were told you could “keep” is in all likelihood no longer available. But when your plan changes, backers of reform will simply blame it on those evil private insurance companies.

The truth is, private health insurance is a low-profit industry, with profit margins of 4% compared with over 20% for major drug manufacturers. With the additional costs of no lifetime caps and no exclusion for pre-existing conditions, these companies will be compelled to raise their premiums in order to stay in business. The individual mandate is supposed to be the tradeoff by providing millions of new customers, but there is no guarantee that this additional volume will preserve profits with all the new regulations. This is what occurred in New York state in 1992, when a new law denied exclusion on the basis of pre-existing conditions.

Every scratch or dent

None of this is terribly surprising. I mean, imagine if your car insurance covered every scratch or dent. Wouldn’t you expect your premiums to rise to meet the expanded coverage? And wouldn’t you expect your auto repair shops to become clogged with cars that didn’t really need to be repaired, competing for time and space with other cars with broken transmissions or burnt-out motors?

If we want lower insurance premiums, we will need to return to a system that favors high deductible, high co-pay catastrophic-type insurance with a built-in disincentive for overuse, such as the kind that some employers have provided as an option up until now. Patients could pay for office visits from health savings accounts or other flexible spending tax shelters. More than 10 million Americans already have such accounts.

Unfortunately, the new law is taking us away from the kind of insurance that compels patients to have more skin in the game. As a result, we’ll all pay in the long run — both financially and with less efficient, perhaps even lower quality, care.

The kind of insurance the new law mandates will, over the years, wear out the health care system in the same way that overuse in orthopedics wears out an elbow or knee joint. This won’t be fun for doctors or, most important, for patients.

Marc Siegel is an associate professor of medicine and medical director of Doctor Radio at NYU Langone Medical Center.

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Voters on ObamaCare: Informed and Opposed

By DAVID BRADY, DANIEL KESSLER AND DOUGLAS RIVERS

The Obama administration has tried to convince Americans that they will like the new health law once they understand its effects. According to a new poll, they understand the law pretty well—and they don’t like what they see.

At the end of last month, we asked a sample of 1,000 adults about health reform. The big picture: A majority (55%) believe the new law will cause them to get lower-quality care, pay more in insurance premiums or taxes, or both. Consistent with other surveys, 42% favor repeal, 36% don’t, and 22% aren’t sure.

Our poll also asked about specific provisions. The mandate that individuals buy insurance or face a tax penalty generated the greatest opposition, with 55% opposed and only 25% in favor. Other aspects of the law received more mixed reviews. The provision requiring employers to offer their employees health insurance or pay a tax penalty had plurality support, with 47% in favor and 36% opposed.

On the surface, these findings might seem to support the administration’s view. People are less negative about some of the specifics than they are about the package as a whole. But does this imply that those who understand the law like it better?

To investigate, we asked people about their perceptions of the link between reform, insurance premiums, and wages—in particular, “if employer insurance costs increase as a result of the health reform plan, do you think the take-home pay of employees will decrease or not?” Policy analysts on the left and the right agree that workers bear the costs of insurance through wage offsets; numerous empirical studies have found this to be true. We therefore used people’s answer to this question as a proxy for their understanding of the effects of health reform.

Fully 49% answered the question correctly, saying that employee pay would decrease by approximately any additional amount that employers have to spend. Thirty-one percent believe employee pay would decrease but by less than the full amount; 19% believe the extra costs would have no effect on pay.

People who understand the economic consequences of health reform span the political spectrum. Although these respondents were somewhat more likely to identify themselves as Republicans than the overall population (37% versus 28%), fully 25% identified themselves as Democrats (versus 34% in the population), and 29% as independents (versus 28% in the population).

Despite their political views, the well-informed share a strong opposition to the new law. They advocate repeal 56/25; oppose the individual mandate 73/13; and oppose the employer mandate 52/36. Such numbers do not bode well for the administration’s claims that to know reform is to like it.

We also asked about three other provisions in the law: the ban on charging more for insurance based on a person’s health (“community rating”), the mandate that employers cover “children” up to age 26, and the ban on lifetime limits on benefits. We told people that these provisions would increase insurance costs by $700, $200, and $100 per year, respectively—approximately what health economists and actuaries have estimated as the added cost to an average employer-sponsored family insurance policy.

People who thought they could enjoy these benefits while someone else picked up the tab generally supported them. Those who believed that there is no “free lunch” opposed community rating (by 43% to 32%) and mandated coverage of children to age 26 (by 48% to 32%). However, they supported the new law’s ban on lifetime limits on benefits by 43% to 33%. These responses are consistent with a poll we conducted in January 2009, published in Health Affairs, which found widespread political support for a more moderate package of reforms.

As the midterm elections approach, one can expect candidates opposed to the new health reform law to point out how its effects on health costs will translate into people’s paychecks. Our poll suggests this message will resonate with voters of all stripes.

Mr. Brady is professor of political science at Stanford University and deputy director of the Hoover Institution. Mr. Kessler is professor of business and law at Stanford and a senior fellow at the Hoover Institution. Mr. Rivers is professor of political science at Stanford, senior fellow at the Hoover Institution, and president of YouGov Polimetrix.

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Judge disses Dems’ ‘Alice in Wonderland’ health defense

POLITICAL.COM

A federal judge in Florida on Thursday said he will allow some of the lawsuit challenging the constitutionality of the health care law to proceed — and criticized Democrats for making an “Alice in Wonderland” argument to defend the law.

U.S. District Judge Roger Vinson allowed two major counts to proceed: the states’ challenge to the controversial requirement that nearly all Americans buy insurance and a required expansion of the Medicaid program.

In his ruling, Vinson criticized Democrats for seeking to have it both ways when it comes to defending the mandate to buy insurance. During the legislative debate, Republicans chastised the proposal as a new tax on the middle class. Obama defended the payment as a penalty and not a tax, but the Justice Department has argued that legally, it’s a tax.

“Congress should not be permitted to secure and cast politically difficult votes on controversial legislation by deliberately calling something one thing, after which the defenders of that legislation take an “Alice-in-Wonderland” tack and argue in court that Congress really meant something else entirely, thereby circumventing the safeguard that exists to keep their broad power in check,” he wrote.

Vinson ruled that it’s a penalty, not a tax, and must be defended under the Commerce Clause and not Congress’s taxing authority.

A Dec. 16 trial date is planned in the lawsuit, brought by 20 state attorneys general and governors. Many legal experts expect it to end up before the U.S. Supreme Court.

Just last week, a Michigan judge struck down a similar challenge to the reform law, arguing that Congress was well within its constitutional authority when it crafted the law. There are several lawsuits against the health law that are working their way through the court system, but the attorney general suit is the highest-profile challenge.

Vinson dismissed three of the states’ challenges, including complaints that the law interferes with state sovereignty as to whether employers must offer insurance; that the law coerces states into setting up insurance exchanges; that the individual mandate violates the states’ due process rights.

The states argued in September that the law violates the Constitution by requiring an expansion of the Medicaid program that’s funded in part by the states and for penalizing people for not purchasing health insurance.

Florida Attorney General Bill McCollum, a Republican who lost the state’s gubernatorial primary this summer, filed the suit minutes after President Barack Obama signed the health care bill into law in March

The Obama administration argued that the states and the National Federation of Independent Business, the small business lobby that joined the suit, don’t have standing to bring the lawsuit. They said that only individual taxpayers do.

The White House downplayed the ruling Thursday.

“Having failed in the legislative arena, opponents of reform are now turning to the courts in an attempt to overturn the work of the democratically elected branches of government,” Stephanie Cutter, an assistant to the president for special projects, wrote on the White House blog. “This is nothing new. We saw this with the Social Security Act, the Civil Rights Act, and the Voting Rights Act – constitutional challenges were brought to all three of these monumental pieces of legislation, and all of those challenges failed. So too will the challenge to health reform.”

But opponents of the law hailed it as a victory.

“It is the first step to having the individual mandate declared unconstitutional and upholding state sovereignty in our federal system and means this case will go forward to the summary judgment hearing that the court has set for December 16th,” McCollum said in a statement.

Vinson avoided politics for most of the 65-page order but noted the extraordinary partisanship surrounding the issue.

“As noted at the outset of this order, there is a widely recognized need to improve our healthcare system,” Vinson wrote. “How to accomplish that is quite controversial. For many people, including many members of Congress, it is one of the most pressing national problems of the day and justifies extraordinary measures to deal with it.

“I am only saying that (with respect to two of the particular causes of action discussed above) the plaintiffs have at least stated a plausible claim that the line has been crossed,” he added.

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Youth Discontent with New Health Reform Law

Christopher Conover, PhD

Support for the Democrats among voters under 30 has plummeted since 2008. Why? The new health reform law packs ample reasons for youth to be very concerned (or even outraged). The law makes health insurance coverage for twenty-somethings more expensive, likely will contribute to their already abysmal unemployment rate, and will force millions to buy insurance they do not want at a price that is a bad deal for them.

The bill makes coverage more expensive for young adults in two ways. First, it restricts how insurance companies can price insurance. Compared to 20-24 year-olds, average health spending for males age 55-59 is more than six times as high, while for males age 60-64 this spending ratio is nearly 9 to 1. But under reform, premiums cannot vary by more than a factor of three across age groups. Young people will pay higher premiums so their parents can pay lower premiums. Since the average income of households headed by 55-64 year olds is 2.5 times as high as that of households headed by those under 25, this rule may strike many young adults as less than fair.  Young adults will be permitted to sign up for a catastrophic plan not available to others, but the adverse impact remains: those under 30 either will have to pay more for the same coverage or pay the same for less coverage.

Obamacare also increases premiums by requiring health insurers to offer preventive benefits with no patient cost-sharing (i.e., deductibles or copayments). There is nothing to stop insurers from offering free preventive benefits now; indeed, many do. However, tens of millions of Americans have coverage with cost-sharing for preventive care; for them, the elimination of cost-sharing apparently is not worth the higher premiums required. This is especially true for young adults since many preventive services (e.g., mammography, cholesterol screening, colorectal cancer screening, osteoporosis screening) are only recommended for adults 35 and older. Young adults again must cross-subside older adults who generally have much higher incomes.

Workers under 25 years of age are far more likely than older workers to be unemployed. For workers age 20-24, the August unemployment rate was 14.7 percent. But it was even higher for 20-24 year-old black males (29.7 percent) and 16-19 year-old black males (49.3 percent). Unfortunately, the new health law amounts to a tax on low-skill workers (e.g., teenagers) and those in low-pay entry-level positions (typically young workers).

The best job opportunities for low-skill workers are in leisure/hospitality services and retail trade. Under the new law, employers with more than 50 workers will be required to either offer health coverage or pay a penalty of $2,000 per full-time equivalent worker. (For part-time workers, total hours worked are summed and divided by 30 to obtain FTE workers). This penalty equals 15 percent of average wages in the food and beverage industry, and 9 percent of wages in retail trade. Worse, even employers who offer coverage still face a penalty of $3,000 for every worker who opts out of employer coverage to obtain subsidized coverage in the new health insurance Exchange. The Exchange will offer minimum-wage workers coverage for no more than 3 percent of their annual income (equaling $36 per month). This is well below the amount most employees contribute toward their employer-provided health plan, so many low-wage workers will want to jump to the Exchange.

For jobs paying only minimum wage, employers will be unable to recover the cost of these penalties by reducing wages. This will provide them a strong incentive to eliminate low-wage jobs by automating services or shifting more tasks to the customer (e.g., scanning one’s own retail purchases). Unemployment among teens and young workers will rise even further.

Finally, everyone must buy coverage (which the foregoing shows will not be a good deal for the young), or pay a tax penalty of $695 per year up to a maximum of three times that amount ($2,085) per family or 2.5 percent of household income, whichever is larger. Thus, minimum-wage youth workers either must buy overpriced coverage or pay a penalty equaling 4.8 percent of wages.

It’s little wonder that voters under 30 who gave President Obama more than two-thirds of their votes in 2008 have grown disillusioned.

Conover is a research scholar at the Center for Health Policy at Duke University.

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Obama grapples with implementing unpopular health law before Nov.

By Bob Cusack and Julian Pecquet

The Obama administration is grappling with implementing the unpopular healthcare reform law in the weeks leading up to the midterm election.

Some regulations establishing the rules of the various pieces of the health overhaul passed by Congress have been issued, and others will be released in the years to come. But the threat of employers dropping their coverage because of the new law has emerged as a thorny political problem this fall.

The timing could not be worse for the administration as undecided voters are making up their minds on which congressional candidates to support on Nov. 2.

Republicans are hammering Democrats on what they call “ObamaCare” while congressional Democrats, by and large, avoid the topic. A new poll by The Hill of 12 battleground districts in the House found that nearly one in four Democrats support a repeal of the health law.

In a June 22 speech touting healthcare reform, President Obama said, “So, starting in September, some of the worst abuses will be banned forever.” He listed several aspects of the law, including an elimination of “restrictive annual limits on coverage.”

At the time, Obama said, “Those days are over.”

But for nearly a million people, those days are not over yet.

Desperate not to violate the president’s pledge that people who like their coverage will be able to keep it, the administration recently granted 30 waivers from annual limit restrictions. Those waivers were quietly posted on the Department of Health and Human Services (HHS) website — without drawing attention to the fact that they’re exempting from the law’s patient protections plans that offer some of the weakest coverage.

An administration official said all but one of the requested waivers was granted, but the source was unclear which company was denied. It is also unclear how many waiver requests are pending at HHS.

The waivers are only valid for one year, raising the possibility that more employers will seek them in the future as the limits increase every year.

The healthcare reform law sets the annual-limit floor for health plans at $750,000 for plan years beginning on or after Sept. 23, 2010. The annual minimum rises to $1.25 million for plan years starting Sept. 23, 2011, and again to $2 million for plan years starting between Sept. 23, 2012, and Jan. 1, 2014. Starting in 2014, annual limits will be banned, with some exceptions.

Lobbyists say their clients are very interested in securing waivers and are not surprised that the administration didn’t issue press releases on them.

A lobbyist who requested anonymity said, “If I were them I’d hide these exemptions too. They have to be worried about other companies seeing this and following suit. If you hit a critical mass of exemptions, it seems to me that a major assumption of the reform package — that the government can simply set an expensive mandate and expect it to be followed — falls apart.”

Administration officials dispute the notion they buried the announcements, pointing to a notice in the Federal Register and a list of the approved waivers on the HHS website.

During his Thursday briefing at the White House, press secretary Robert Gibbs was asked six different questions on the HHS waivers. The tenor: Now that the administration has started granting waivers, where will it stop — and doesn’t doing so undermine healthcare reform?

“I’m not worried that the dam is going to burst,” Gibbs answered, referring to a potential deluge of waiver requests.

The debate on this issue heated up last week after The Wall Street Journal reported that McDonald’s was threatening to drop coverage for 30,000 employees if the company didn’t get a waiver from the law’s medical loss ratio requirement for its so-called “mini-med plans.”

The administration pushed back hard against the story, claiming it was too early to speculate on who was going to get waivers for the medical loss ratio since the regulations putting it in place don’t even exist yet.

HHS Secretary Kathleen Sebelius also told reporters that the administration was being flexible with employers to help them keep their coverage. She then revealed that McDonald’s had been granted a waiver from the annual limits provision of the law within 48 hours of asking for it. Other companies that received waivers included CIGNA, Denny’s and Aetna.

The HHS waivers may have assuaged employers, but they prompted infuriated healthcare reform advocates to strongly criticize the administration.

The single-payer advocates at Physicians for a National Health Program argued that this is one more example of why Medicare for all would have been a much better solution than Democrats’ attempt to more thoroughly regulate the private health insurance market.

“Is HHS really that sympathetic to employers while being so uncaring about the needs of their employees?” senior policy fellow Don McCanne said in a statement. “I mean waivers … not just waivers … but expedited waivers! Just what was reform supposed to have accomplished?”

New York Times columnist David Leonhardt weighed in on Wednesday, noting that McDonald’s main health plan offers $2,000 worth of benefits a year — a far cry from the $750,000 minimum called for in the reform law. Getting rid of such plans, he suggested, should be embraced rather than avoided.

The healthcare reform law “does represent progress,” Leonhardt wrote. “The fact that it is beginning to disrupt the status quo — that some insurance policies will eventually be eliminated and some inefficient insurers will have to leave the market altogether — is all the proof we need.”

HHS spokeswoman Jessica Santillo said, “HHS is to committed strengthening employer-based coverage for employees and retirees, while building a bridge to a new competitive marketplace in 2014. Applications for waivers from annual limit requirements are reviewed on a case-by-case basis by Department officials who look at a series of factors including whether or not a premium increase significantly exceeds medical inflation or if a significant number of enrollees would lose access to their current plan because the coverage would not be offered in the absence of a waiver.”

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The Doctor Deficit

ObamaCare: One of the marks of national health care is the waiting-list problem that plagues Britain and Canada. Delays in treatment have caused suffering and, in some cases, death. Soon, we’ll be waiting for doctors too.

Last week, the Association of American Medical Colleges reported that the looming doctor shortage will be worse than previous reports claim because of ObamaCare.

Rather than “a baseline shortage of 39,600 doctors in 2015, current estimates bring that number closer to 63,000, with a worsening of shortages through 2025,” says the medical college group’s Center for Workforce Studies.

Unless the country acts now, says the Center for Workforce Studies, we will be more than 91,000 doctors short in just 10 years. The number includes a shortage of 45,000 primary care physicians and 46,000 surgeons and medical specialists.

This study confirms what others have said.

Two years ago, the physician search firm of Merritt, Hawkins & Associates estimated that by 2020 the U.S. will need 90,000 to 200,000 more doctors than we will have. At that point, the wait to see a doctor for a routine visit would be three to four months.

A year after the Merritt Hawkins report, Joseph Stubbs, president of the American College of Physicians, the country’s second-largest doctor group, talked about the arrival of “a catastrophic crisis” even before ObamaCare had been passed and signed.

“Now we’re talking 30 million more people who will want to see a doctor” under the Democrats’ overhaul he said. “The supply of doctors just won’t be there for them.”

As alarming as those numbers are, the reality might be worse. The ranks will be thinned as physicians simply refuse to work under ObamaCare. In August 2009, 45% of doctors told our IBD/TIPP Poll that they would consider leaving their practices or taking early retirement if the Democrats’ version of reform were to become law. And it did.

The doctors cited various reasons behind their decisions to leave. But the most common explanations centered around the increased costs under the Democrats’ plan, the bureaucratic controls it would bring and its lack of protection from runaway malpractice lawsuits.

“This unconstitutional plan gives sovereignty over our bodies to unelected, unaccountable, ignorant bureaucrats,” said one. “Every governmental micromanagement of our lives has failed in its objective, and caused moral and economic bankruptcy.”

While the oncoming shortage will hit everyone, the Center for Workforce Studies says “the impact will be most severe on vulnerable and underserved populations.” And weren’t those the very people the Democrats said they wanted to help by moving the country into a national health care system?

It’s almost ironic, then, that their attempt to add 32 million to the rolls of the insured will exacerbate the coming physician shortage and is likely to create the sort of disastrous waiting lists that have led to unnecessary pain, suffering and death in Canada and Great Britain.

Don’t think that it can’t happen here. It already has.

In Boston, where the state government runs health care and in doing so has boosted the insured rate from 93.6% to 97.4%, the average waiting time to see a family doctor, according to Merritt, Hawkins & Associates, is now 63 days. That’s the lengthiest wait in the 15 cities the group surveyed and almost two months longer than the wait in Miami, where it’s a relatively short seven days.

With Boston being home to no less than 14 teaching hospitals and located in the state with the highest concentration of doctors, shouldn’t the wait times be much shorter?

Yes, but the intrusion of government changes the calculation. Merritt Hawkins said the longer wait is “driven in part” by the state’s health care reform initiative.

As is almost always the case, a proposal for government to step in and improve lives actually makes matters worse. A few Americans might be better off under ObamaCare than they were before. But for almost everyone else, health care quality will decline.

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3M to Change Health-Plan Options for Workers

By JANET ADAMY

3M Co. confirmed it would eventually stop offering its health-insurance plan to retirees, citing the federal health overhaul as a factor.

The changes won’t start to phase in until 2013. But they show how companies are beginning to respond to the new law, which should make it easier for people in their 50s and early-60s to find affordable policies on their own. While thousands of employers are tapping new funds from the law to keep retiree plans, 3M illustrates that others may not opt to retain such plans over the next few years

The St. Paul, Minn., manufacturing conglomerate notified employees on Friday that it would change retiree benefits both for those who are too young to qualify for Medicare and for those who qualify for the Medicare program. Both groups will get an unspecified health reimbursement instead of having access to a company-sponsored health plan.

The maker of Post-it notes and Scotch tape said it made the announcement now to give retirees a chance to explore different options during this year’s benefit-enrollment period, according to a 3M memo reviewed by The Wall Street Journal. A 3M spokeswoman, Jacqueline Berry, confirmed the contents of the memo.

“As you know, the recently enacted health care reform law has fundamentally changed the health care insurance market,” the memo said. “Health care options in the marketplace have improved, and readily available individual insurance plans in the Medicare marketplace provide benefits more tailored to retirees’ personal needs often at lower costs than what they pay for retiree medical coverage through 3M.

“In addition, health care reform has made it more difficult for employers like 3M to provide a plan that will remain competitive,” the memo said. The White House says retiree-only plans are largely exempt from new health insurance regulations under the law.

The company didn’t specify how many workers would be impacted. It currently has 23,000 U.S. retirees.

Americans become eligible for the Medicare insurance program at age 65. Starting in 2015, 3M retirees too young to qualify for Medicare will receive financial support through what the company called a “health reimbursement arrangement” and won’t be able to enroll in the company’s group insurance plan. The company described that as an account retirees can use to purchase individual insurance through exchanges that the health law will create in 2014. 3M didn’t provide details on the financial contributions.

Currently, these workers get credits they can use to buy the company’s health plan offering medical, dental and prescription drug coverage, or they can elect to enroll in a health savings account. Such accounts typically provide employees with a contribution to help cover their health costs, and incentivize them to keep medical expenses low.

For those old enough to qualify for Medicare, 3M in 2013 will replace its current retiree medical program with a health reimbursement account, funded partly by the sponsor, that can be used to buy an individual Medicare plan. The federal government provides Medicare but enrollees pay a premium and can opt for privately run plans. Currently, these workers have had access to a reimbursement account that could be used to buy into the company’s group health plan.

Democrats that crafted the legislation say they tried to incentivize companies to keep their retiree coverage intact, especially until 2014. The law creates a $5 billion fund for employers and unions to offset the cost of retiree health benefits. More than 2,000 entities, including many large public companies, have already been approved to submit claims for such reimbursement. 3M did not apply.

“We would certainly welcome their application,” said Reid Cherlin, a spokesman for the White House. Ms. Berry, the 3M spokeswoman, said the company was monitoring the program and its requirements.

Sen. Charles Grassley, an Iowa Republican, said that “for all the employees who were promised they’d be able to keep their current benefits after the health-care law passed, I’m worried that the recent changes we’ve heard about…are just the beginning.”

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Health overhaul centerpiece endures growing pains

  By RICARDO ALONSO-ZALDIVAR, Associated Press Writer

WASHINGTON – It’s a centerpiece of President Barack Obama’s health care remake, a lifeline available right now to vulnerable people whose medical problems have made them uninsurable.

But the Pre-Existing Condition Insurance Plan started this summer isn’t living up to expectations. Enrollment lags in many parts of the country. People who could benefit may not be able to afford the premiums. Some state officials who run their own “high-risk pools” have pointed out potential problems.

“The federal risk pool has definitely provided critical access, in some cases lifesaving access, to health insurance,” said Amie Goldman, chair of a national association of state high-risk insurance pools. “That said, enrollment so far is lower than we would have expected.” Goldman runs the Wisconsin state pool, as well as the federal plan in her state.

California, which has money for about 20,000 people, has received fewer than 450 applications, according to a state official. The program in Texas had enrolled about 200 by early September, an official in that state said. In Wisconsin, Goldman said they’ve received fewer than 300 applications so far, with room for about 8,000 people in the program.

That’s not how it was supposed to work.

Government economists projected as recently as April that 375,000 people would gain coverage this year, and they questioned whether $5 billion allocated to the program would be enough.

Federal officials won’t provide enrollment figures, saying several large states have yet to get going.

“We don’t think this is getting off to a slow start,” said Jay Angoff, director of a new insurance oversight office at the Department of Health and Human Services. “We think this is getting off to a good and orderly start.”

Angoff said he’s confident more people will sign up, and he pointed out the program was set up in near-record time.

What happens with the Pre-Existing Condition Insurance Plan is important because it could foreshadow problems with major changes under the law that are still a few years away.

For those who get into the program, it can be a life changer.

Preschool teacher Gail O’Brien, 52, was uninsured and facing cancer treatments that would have left her family deeply in debt. She now pays $495 monthly for a plan with a $5,000 annual deductible. She has a type of immune system cancer, and just one chemotherapy treatment runs to $16,000.

“When I was diagnosed, they told me I had a 60 percent chance of being cured,” said O’Brien, of Keene, N.H. “That’s pretty good odds, but I was also terribly worried about finances. Now I don’t feel like we can’t afford the treatment. It’s manageable to us … and I know I’m going to beat this.”

Obama announced the plan last fall in his health care speech to Congress.

“For those Americans who can’t get insurance today because they have pre-existing medical conditions, we will immediately offer low-cost coverage that will protect you against financial ruin if you become seriously ill,” he pledged.

The result was a program that offers health insurance to people with medical problems at prices the average healthy person would pay, although that’s not necessarily cheap. To qualify, you must have had a problem getting insurance because of a medical condition, and have been uninsured for at least six months. Only U.S. citizens and legal residents can get help.

The program will last until 2014, when the new health law requires insurers to accept all applicants regardless of medical history. Most states have opted to take federal money and design their own programs. But in 23 states and the District of Columbia, the federal government runs the plan directly.

In interviews, state officials and independent experts raised several potential problems.

_Premiums may be out of reach. In many states, people in their 40s and 50s face monthly premiums ranging from $400 to $600 and higher. “I think there’s some sticker shock going on,” said Sabrina Corlette, a Georgetown University research professor. “People who may be eligible are finding out that even if they can get the insurance, the price is too high.” Pennsylvania, which set a premium of $283 for all ages, has had no problem getting applicants.

_A barrier may include requirements that people be uninsured for at least six months and that people provide documentation that they’ve been turned down by an insurer. “There are many people who don’t meet the criteria for the federal pool, particularly the six months without coverage,” said Goldman.

_In states where the federal government runs the program directly, the insurance plan doesn’t provide coverage for prescription drugs until people have met a $2,500 annual deductible. “Applying this high … deductible to the pharmacy benefit is a real barrier to consumer access to medications,” Steven Browning, a Texas official, wrote HHS last week.

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Crass Market – How ObamaCare’s exchanges undermine quality health care

When Barack Obama pitched his health care overhaul last year, he declared, “My guiding principle is…that consumers do better when there is choice and competition.” But judging by the legislation he signed into law, his idea of a competitive marketplace is one that’s run by the government.

ObamaCare calls for each and every state to set up a “health exchange,” a highly regulated, government-run marketplace where individuals can shop for health insurance, by 2014. Each state is required to either show progress on building an exchange by 2013 or make way for the federal government to build and manage one directly.

These exchanges are the chief method by which the federal government will exert control over the insurance marketplace. Despite being operated at the state level (provided they choose to set up the exchange), state governments won’t entirely be in charge. The Department of Health and Human Services will have the authority to determine minimum health insurance requirements for most medical services and providers as well as cost-sharing details for plans offered through the exchanges. By the end of the decade, the Congressional Budget Office estimates that 24 million individuals will be served by these exchanges.

In theory, they will expose health insurance customers to greater competition while protecting them through regulation. Insurers participating in the exchanges, for example, will face strict limits on how they can price their premiums according to individual risk factors. In practice, they will likely prove difficult to design and implement, and may ultimately undermine the country’s quality of care. No matter what, there is little doubt that the exchanges will fundamentally alter the health insurance landscape across the states.

Already, some state insurance regulators—including the head of the National Association of Insurance Commissioners’ exchange task force—are openly advocating banning insurance companies from selling individual policies outside the exchanges, leaving the state-run exchanges as the sole market for individual health insurance.

Others simply propose applying exchange regulations to all health insurers, even if they operate outside the exchanges. The effect of both policies would be the same: to get rid of individual insurance sales outside the purview of the exchanges and their rules.

States tasked with building the exchanges can expect the process to be tricky at best. Because the exchanges will be the vehicle through which individuals receive ObamaCare’s new health insurance subsidies, they will be expected to quickly and accurately determine an individual’s eligibility. That will require the exchanges to rapidly verify such variables as family size, location, smoking status, and income.

Income verification will be the biggest challenge of all, as eligibility is based on family income—a major problem for dual income homes. Will states ask employed women to provide their husband’s tax returns? What if she’s separated but not divorced?

Meanwhile, there’s evidence that the sort of government-managed competition fostered by exchanges does little to prevent adverse selection. Indeed, because insurers will be limited in terms of how they can charge based on health risk factors, the new rules may encourage plan providers to avoid investing in resources that help the sick. 

For example, a 1997 New England Journal of Medicine study looked at billing records for elderly Americans participating in Medicare HMOs in Florida. The study found that, despite exchange-like regulations guaranteeing access to any HMO plan and prohibiting insurer cherry picking (or “medlining,” as it’s sometimes called), insurance companies managed to lure in the healthiest—and cheapest—patients, while leaving the sickest, most expensive patients on publicly funded Medicare.

Individuals enrolled in the HMOs used two-thirds less care than those on traditional Medicare. And those who eventually rejoined the publicly funded Medicare rolls went on to use 180 percent once back on the public program. In other words, despite rules that were designed to ensure equality, private insurers had still managed to attract the healthiest, cheapest patients while pushing the sickest, most expensive patients away.

But how do they do this? As John Goodman, president of the National Center for Policy Analysis, explained in his book Lives at Risk, plan providers in managed care environments offer benefits likely to attract healthy people, like sports club memberships, but avoid or dump services that will attract sick and expensive individuals.

In 1998, for example, the Kaiser Family Foundation released a study suggesting that Medicare HMOs tailored their advertising to “target physically and socially active seniors, rather than beneficiaries in poor health.” That same year The Washington Post reported on one health plan in Minnesota that offered easy access to obstetricians, but quickly dropped the service after it lost millions by attracting too many pregnant women. Another health plan in California quit dealing with a university hospital that had developed a reputation for pursuing complex, expensive treatments.

Or look at the case of Shelby Rogers, as noted by the Cato Institute’s director of health policy studies, Michael Cannon. In 2008, The Washington Post reported on the story of the 13-year-old with muscular atrophy whose private duty nurse was initially paid for by her family’s federally-provided insurance. Eventually, though, the insurer tried to back out. Why? According to a representative, the reason was because coverage for private duty nurses made the plan too likely to attract patients with similar maladies as Shelby’s.

ObamaCare’s defenders will likely argue that such practices merely prove the need to get tough with insurers. The ominous warnings against insurers from Health and Human Services Secretary Sebelius surely count. But in ObamaCare’s exchanges, which force insurers to take all comers and charge similar prices regardless of health history, pressure to avoid the sick by any means will be fierce. Squeezed by federally-required regulations, insurers will certainly compete—but only to avoid the sick.

Peter Suderman is an associate editor at Reason magazine and a 2010 Robert Novak Journalism Fellow.

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